Wed, 25 Mar 2009

Austrian Economists can explain this recession in the same way that all the other ones are explained:

Government inflates the currency.

Businesspeople think business is expanding, and invest and hire.

Because the currency increase isn't a result of saving, but instead a result of inflation, there are no savings to spend to buy the products the businesspeople created.

Businesspeople have to sell their capital goods at a loss and fire people.

Economy stays in the doldrums until there's enough savings to justify business expansion OR until the government inflates "the hair of the dog".

This is why it's so painful when government stops inflating. But if government doesn't stop inflating, you have Turkey, or Zimbabwe, or Germany in the 30's. What is our government doing right now? Inflating. But inflating doesn't fix anything -- it just postpones the pain. The only fix is if people save money to fund the business expansion. What is Krugman (the moron) telling us that we need to do? Spend, spend, spend, don't save! Except for the fact that every REAL economist will tell you that that's stupid, everyone believes Krugman because back before his brain failed, he got a Nobel Prize.